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Home / Business / Shares of this solar company have soared 300% by 2020. Here’s why

Shares of this solar company have soared 300% by 2020. Here’s why



Sunrun, America’s largest rooftop solar company, is up more than 300 percent so far this year. And Invesco Solar ETF (TAN) has more than doubled by 2020.

It was part of a rally driven in part by hopes for a green wave that would lead to more federal support for Renewable energy, as Joe Biden has called for to wipe carbon emissions from the grid by 2035.

Meanwhile, investors have dumped fossil fuel stocks, especially Big Oil companies, amid the rise of environmental, social and corporate governance mechanisms (ESGs). ) and socially conscious investment. ExxonMobil (XOM) ceased to be America̵
7;s largest energy company by market value. It has been dethroned by the solar and wind energy company NextEra Energy (ARE NOT).

“It’s just a sign that renewables will be a faster growing, more affordable solution. There’s no denying that anymore,” Sunrun co-founder and CEO Lynn Jurich told CNN Business.

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Jurich doubled the bet by the takeover of rival Vivint worth $ 3.2 billion in July. The deal, which ended last month, merged two of the nation’s largest rooftop solar companies.

The Vivint takeover meant Jurich was juggling a multibillion-dollar acquisition and her usual assignment as a public company CEO – while working from home on time. pandemic happened with two young children

Jurich, 41, said: “We are all struggling with the balance between work and life. Children are the hardest part.” “I was able to spend more time with my kids because I worked from home. It had good days and bad days, like everyone else.”

Biden wins

Investors flocked to buy Sunrun stock in the hope that the buyback, along with more favorable policies outside of Washington, would boost the company’s outlook.

“The Biden platform is very suitable for renewable energy, especially solar energy,” said Sophie Karp, senior analyst at KeyCorp.

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There is no doubt about the increase in solar energy, Karp said Sunrun (RUN) and its opponents are partly due to the expectation that the Democrats will take over.
The Invesco WilderHill Clean Energy ETF (PBW) (PBW), which owns shares in Sunrun, SunPower (SPWR), Tesla (TSLA) and other renewable companies, which have nearly doubled this year. Opposite, SPDR fund for the energy sector (XLE) is governed by Exxon and Chevron (CVX) sale 50%.

“Biden is priced,” she said. “I definitely think we’ll see the disappointment of recreating names if he doesn’t win.”

Jurich, Sunrun’s boss, has downplayed the impact of politics on the industry’s future.

“In terms of running, it’s interesting that Solar has huge bipartisan support,” she said. “That encourages us no matter which way the election goes. Both results support the business.”

Elections can decide the fate of tax credit

Joe Biden has proposed a federal investment of nearly $ 2 trillion to tackle the climate crisis and create union jobs that cannot be outsourced.
A Biden The Climate Task Force has called for the installation of eight million partial solar roofs by cutting red tape to accelerate licensing faster. That’s an ambitious goal as the United States currently has only about 2.2 million residential solar installations, according to KeyCorp.
Crucially, Biden’s tax plan also calls for Congress to extend the renewable energy tax credit and restore the Federal Energy Investment Tax Credit (ITC). The tax credit, for homeowners who buy or finance rooftop solar installations, will be phased out by 2022.

“The expansion of tax credits under Democrats, which people are increasingly pricing in this year, could be worth a lot,” said Michael Weinstein, an analyst at Credit Suisse. “It will drive growth and make solar energy more competitive.”

Weinstein stressed, however, that renewables – and in particular solar – no longer need help from Uncle Sam to compete with fossil fuels. That’s because the costs of building renewable energy have come down.

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“Solar is ready to stand on its feet,” he said. “It doesn’t need tax credits or federal assistance.”

Jurich said that Sunrun would obviously “encourage” the extension of tax credits and noted that it has bipartisan support, especially since it was enacted in 2006 under the former President. George W. Bush. The solar tax credit has begun a gradual decline this year to reduce the amount individuals and companies can claim. By 2022, it will be zero for residential solar – unless Washington acts.

“It’s a person who creates a lot of jobs. And that’s one of the only federal policies that will help us tackle the carbon reduction problem in the electricity system,” Jurich said. “If it is not renewed, we will continue. The market is going nowhere.”

Solar energy is on the rise as doubts about fossil fuels are growing

Regardless of the outcome of the election, analysts expect investor interest in renewable energy to remain due to the influence of the ESG movement.

Weinstein, an analyst at Credit Suisse, said he is responding to requests from money managers in the oil and gas sector who are under pressure to diversify their portfolios to halt. There is a long-term risk that fossil fuels will be replaced by renewable energy.

That trend helps explain why the valuation on earnings of Sunrun and other renewable energy stocks has risen this year, even as fossil fuel companies are having the opposite experience.

“It brings more money to the ecosystem,” Weinstein said. “And more money sometimes means higher prices.”


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